BAILMENT-INTRODUCTION

There are many instances of bailment in our daily lives – when we give our clothes for laundry,
when we use valet parking for our cars. We deliver our goods to another person or leave them in
the power of another person for a purpose and expect to receive our goods back when the
purpose has been achieved.

For example, a man visits a repair shop for getting his television set fixed. The television set is
left at the shop where the repair man examines it and fixes the problem. Once fixed, the
television set has to be returned to its owner. There is a contract of bailment between the man
and the repair-man.

Bailment is a process where the owner of certain goods places them in the temporary possession
of another person. In simple terms, bailment means that a person delivers his goods to another
person or put them in another’s possession for a specific purpose and there is an express or
implied understanding between the two people that once the purpose has been achieved, the
goods will be returned to the owner – the person who bailed them.

Chapter IX (Section 148 – 181) of the Indian Contract Act, 1872 deals with the general rules
relating to bailment. The Chapter is not exhaustive on the topic of bailment – there are various
other Acts which deal with other types of bailment like the Carriers Act, 1865, the Railways Act,
1890, the Carriage of Goods by Sea Act, 1925
DEFINITION OF BAILMENT

The word ‘bailment’ is derived from the French word ‘bailler’ which means ‘to deliver’.
Etymologically, it means any kind of ‘handing over’. In legal sense, it involves change of
possession of goods from one person to another for some specific purpose.

Section 148 of Indian Contract Act 1872 defines ‘Bailment’ as the delivery of goods by one
person to another for some purpose, upon a contract that they shall, when the purpose is
accomplished, be returned or otherwise disposed of according to the direction of the person
delivering them.

The person who owns and delivers the goods is called the ‘bailor’. The person to whom the
goods are delivered is called the ‘bailee’.

Example: A man drops off his clothes for dry cleaning. He is the bailor and the purpose of
bailment is to have the particular set of clothes cleaned. The dry cleaner is the bailee – he is the
temporary custodian of the clothes and is responsible for keeping them safe and to return them to
the bailor once they have been cleaned.

Explanation to Section 148 states that if a person already in possession of the goods of another
person contracts to holds the goods as a bailee, he becomes the bailee even though the goods
may not have been delivered to him by way of bailment in the first place. For example, a seller
of goods becomes a bailee if the goods continue to be in his possession after sale is complete.
Here the original possession of goods was with the seller as the owner of the said goods and
after the sale, his possession is converted into a contract of bailment.

Example: A has a motorcycle that he sells to B who leaves the motorcycle in the possession of A
while he is out of town. Here, A becomes the bailee even though he was the owner originally.

Halsbury defines Bailment as ‘delivery of personal chattels in trust on a contract, express or

implied, that the trust shall be duly executed and chattels redelivered in either their original or
altered form, as soon as the time of use, or condition on which they had been bailed has elapsed
or been performed respectively’.
NATURE OF BAILMENT

Bailment is a type of special contract and thus, all basic requirements of contract like consent of
parties, competency, etc are applicable to any contract of Bailment. A bailment is usually created
by an agreement between the bailor and bailee. Section 148 specifically talks of bailment via a
contract. But a valid bailment can also arise in absence of express contracts or from invalid or
voidable contracts.

In bailment, neither the property nor the ownership of the goods involved is transferred at any
point. Only the temporary possession of the bailed goods is transferred and the ownership of
such goods remains with the bailor. The bailor can demand to have the property returned to him
at any time.

WHAT MAY BE BAILED

Only ‘goods’ can be bailed and thus, only movable goods can be the subject matter of bailment.
Current money or legal tender cannot be bailed. Deposition of money in a bank is not bailment as
money is not ‘goods’ and the same money is not returned to the client. But the coins and notes
that are no longer legal tender and are more or less just object of curiosity, then they can be
bailed

ESSENTIAL FEATURES

Section 148 of the Indian Contract Act, 1872 makes it very clear that there are three essential
features of Bailment, namely:

1) Delivery of Possession

2) Delivery upon Contract

3) Delivery for a purpose and Return of Goods

1) Delivery of Possession: It is essential for bailment. There must be transfer of possession
of the bailed goods from bailor to bailee and the goods must be handed over to the bailee for
whatever is the purpose of bailment. Here, possession means control over goods and an intention
to exclude others from exercising similar control over the same goods. Thus, the bailee must
have actual physical control of the property with the intent to possess it for a valid bailment.

As per Section 149, the delivery can also be made to the bailee by doing anything which has the
effect of putting the bailed goods in the possession of the intended bailee or any person
authorized by him for this purpose.

Thus, the delivery of possession can be actual or constructive. The delivery may either put the
bailee in the actual physical possession of the goods or put the bailee in a position of power over
such goods that may be possessed later. The essential of a bailment is the delivery of goods for a
temporary purpose.

Mere custody of goods is not the same as delivery of possession. A guest who uses the goods of
the host during a party is not a bailee. Similarly, it was held in [ CITATION Rea38 \l 16393 ]1
that a servant in custody of certain goods by the nature of his job is not a bailee. Similarly, a
servant holding his master’s umbrella is not a bailee but is a custodian.

Similarly, hiring and storing goods in a bank locker by itself is not bailment thought there is
delivery of goods to the bank premises. The goods are in no way entrusted to the bank. A bank
cannot be presumed to know what goods are stored in any given locker at all the times. If a bank
is given actual and exclusive possession of the property inside a locker by the person who hired
the locker, only then can bailment under Section 148 can be presumed.

In [ CITATION Atu03 \l 16393 ]2, it was held that mere hiring of a bank’s locker and storing
things in it would not constitute a bailment. But the position changes completely if the locker in
the safe deposit vault of the bank can be operated even without the key of the customer.

1
1838 5 Bing NC 136

2
AIR 2003 P&H 11
Example: A hired a locker in a bank and kept some of his valuables in it. He was given one key
to open the locker. But the bank manager of the particular branch had fraudulently filed the
levers of the locks of the lockers. Thus, the lockers could be opened even without the key of the
customers. A’s valuables went missing. A’s control over the valuables in that locker had gone
because the locker could be operated even without A’s key. The bank was liable for the loss of
A’s belongings from the locker as it became a bailee. This example is similar to the case of
[ CITATION Nat62 \l 16393 ]3.

Thus, it is clear that the nature of possession is very important to determine whether a delivery is
for bailment or not. If the owner continues to have control over the goods, there can be no
bailment.

Delivery of possession, as required for bailment , can be made in two ways-:

Actual Delivery: Here, the bailor hands over the physical possession of the goods to the
bailee.

Example: A’s watch is broken. When he leaves his watch at the showroom for repair, he has
given actual delivery of possession of goods to the showroom.

Constructive Delivery: Constructive delivery is an action that the law treats as the
equivalent of actual delivery. It can be difficult to deliver intangible

In constructive delivery, the physical possession of the goods may not be handed over. The
possession of the goods may remain with the bailor with the consent or authorization of the
bailee. In constructive delivery, an action on part of the bailor merely puts the bailee in position
of power with respect to the bailed goods. The bailor gives the bailee the means of access to
taking custody of it, without its actual delivery.

3
AIR 1962 Punj. 534
  
In [ CITATION Ban66 \l 16393 ]4 a person pledged cinema projector with the bank but the bank
allowed him to keep the projector so as to keep the cinema hall functional. It was held that there
was constructive delivery because action on part of the bailor had changed the legal character of
the possession of the projector. Even though the actual and physical possession was with the
person, the legal possession was with the bank, the bailee.

2) Delivery upon Contract: It is necessary that the goods are delivered to the bailee and
returned to the bailor when the purpose is accomplished upon a contract. This means there
should a contract between the two parties for such transaction of delivery and subsequent return.
If there is no contract, there is no bailment. The contract giving rise to bailment can be express
or implied.

Property deposited in a court under orders is not property delivered under a contract. Such
delivery or transfer does not constitute bailment.

Exception to the delivery upon contract: A finder of goods is treated as a bailee even if
there is no contract. A finder of goods is a person who finds the goods belonging to some other
person person and keeps them under his protection till the actual owner of the goods is found.

The case of [ CITATION Las66 \l 16393 ]5 is one the first where the courts started imposing the
obligations of a bailee even without a contract.

3) Delivery for a purpose and Return of Goods :  There has to be a purpose for the
bailment of goods and it is mandatory that once such purpose is accomplishes, the goods have to
be returned to the bailor or be disposed off per his instructions. Bailment cannot arise if the
goods are not to be specially accounted for after completion of such task or purpose. This is a
feature of bailment that distinguishes it from other relations like agency, etc.

4
AIR 1966 AP 163

5
AIR 1966 Bom 134, (1965)
CONCLUSION

The bailee has to perform according to the obligations laid down in the contract of bailment and
as per the law of the land. He is being inconsistent or negligent while performing his obligation
or duty would make him liable under various provisions of law. In each contract of law, he has a
certain uniform or fixed obligations to comply with, and he cannot part with those basic
obligations even if a contract does not provide for any such obligations. These obligations are the
essence of bailment contract. The obligations might differ depending on the facts but there are
certain duties which are implied, and reasonable care is to be taken by the bailee. The bailee’s
responsibility towards the goods bailed can be increased by way of providing provisions in that
regard but it cannot be lowered down, i.e., he cannot repudiate his responsibility.

 
BIBLIOGRAPHY

1. www.indiankanoon.com
2. www.blog.ipleaders.in
3. www.scc.com
4. www.manupatra.com
5. www.jstor.com
6. www.heinonline.com